SVB Financial Group, the parent company of Silicon Valley Bank, announced Friday in a press release that it had filed for Chapter 11 bankruptcy protection.
The filing comes after Silicon Valley Bank collapsed last week in the second largest bank failure in U.S. history. The firm had discharged assets at a loss from a portfolio containing long-term government and corporate bonds to supply depositors with their funds before the Federal Deposit Insurance Corporation assumed control of the company.
Bank regulators in the state of California closed down the bank and named the Federal Deposit Insurance Corporation (FDIC) as the receiver.
“SVB Financial Group intends to use the court-supervised process to evaluate strategic alternatives for SVB Capital, SVB Securities and the Company’s other assets and investments. As previously announced, this process is being led by a five-member restructuring committee appointed by the SVB Financial Group Board of Directors,” according to the release.
The company said it had around $2.2 billion in liquidity and noted that both its securities subsidiary and its venture capital unit were not included in the Chapter 11 filing.
The FDIC will recruit investment bank Piper Sandler to handle the auction of Silicon Valley Bank, according to a report from Reuters, after the government-backed company failed to sell the firm to another financial institution on Sunday.
The vast majority of deposits at Silicon Valley Bank, which offered services to nearly half of venture-backed technology and healthcare firms in the United States, exceeded the $250,000 threshold insured by the FDIC. Regulators scrambled to guarantee all deposits at Silicon Valley Bank such that the remainder of the financial system, in which roughly half of deposits surpass $250,000, would remain protected.
Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FDIC Chairman Martin Gruenberg said in a joint statement on Sunday that the banking system “remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.” They vowed that “no losses” associated with the collapse of Silicon Valley Bank would be “borne by the taxpayer.”
Ben Zeisloft contributed to this report.
This is a developing news story; check back in for updates.